Fund Support for Debt- and Debt-Service-Reduction Operations
March 16, 2021
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The note concludes that the Fund could support a member’s use of buybacks, cash sweeteners, or collateral in the context of a Fund-supported program, provided that (i) debt restructurings using buybacks, cash sweeteners or collateral offer significant efficiency gains relative to debt restructurings that do not rely on such instruments, but are underpinned by a regular Fund-supported program; and (ii) an adequate cushion of non-multilateral debt remains after the operation. The conditions under which buybacks, cash sweeteners or collateral can be expected to deliver significant efficiency gains are narrow and specified in some detail.
Subject: Asset and liability management, Currencies, Debt reduction, Debt relief, Debt restructuring, Debt service, External debt, Financial crises, Money
Keywords: cash payment, Currencies, DDSR Policy, DDSRO operation, Debt reduction, Debt relief, Debt restructuring, Debt service, debtor country, fund staff, Fund-financed DDSROs, Fund-financing of buyback, Fund-supported DDSROs, PP, Sub-Saharan Africa
Pages:
41
Volume:
2021
DOI:
Issue:
018
Series:
Policy Paper No. 2021/018
Stock No:
PPEA2021018
ISBN:
9781513574110
ISSN:
2663-3493
